Correlation Between Indo Kordsa and Primarindo Asia

Can any of the company-specific risk be diversified away by investing in both Indo Kordsa and Primarindo Asia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Indo Kordsa and Primarindo Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indo Kordsa Tbk and Primarindo Asia Infrastructure, you can compare the effects of market volatilities on Indo Kordsa and Primarindo Asia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Indo Kordsa with a short position of Primarindo Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Kordsa and Primarindo Asia.

Diversification Opportunities for Indo Kordsa and Primarindo Asia

-0.72

Correlation Coefficient

Indo Kordsa  Primarindo Asia

Pay attention - limited upside

The 3 months correlation between Indo and Primarindo is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Indo Kordsa Tbk and Primarindo Asia Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primarindo Asia Infr and Indo Kordsa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Indo Kordsa Tbk are associated (or correlated) with Primarindo Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primarindo Asia Infr has no effect on the direction of Indo Kordsa i.e., Indo Kordsa and Primarindo Asia go up and down completely randomly.

Pair Corralation between Indo Kordsa and Primarindo Asia

Assuming the 90 days trading horizon Indo Kordsa Tbk is expected to generate 0.71 times more return on investment than Primarindo Asia. However, Indo Kordsa Tbk is 1.4 times less risky than Primarindo Asia. It trades about 0.04 of its potential returns per unit of risk. Primarindo Asia Infrastructure is currently generating about -0.02 per unit of risk. If you would invest  574,269  in Indo Kordsa Tbk on September 16, 2024 and sell it today you would earn a total of  25,731  from holding Indo Kordsa Tbk or generate 4.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Indo Kordsa Tbk  vs.  Primarindo Asia Infrastructure

Indo Kordsa Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Indo Kordsa Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Indo Kordsa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Primarindo Asia Infr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Primarindo Asia Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Primarindo Asia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Indo Kordsa and Primarindo Asia

The main advantage of trading using opposite Indo Kordsa and Primarindo Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Kordsa position performs unexpectedly, Primarindo Asia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Primarindo Asia will offset losses from the drop in Primarindo Asia's long position.

The idea behind Indo Kordsa Tbk and Primarindo Asia Infrastructure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.